Now that the worst of the recession is behind us, it is even more important that you review your short-term insurance policies regularly, because you face receiving only a partial payout or having your claim rejected if your policy is not up to date with, for example, the insured value of your possessions.
Debbie Barret, the general manager of marketing at First National Bank (FNB) Insurance Brokers, says many consumers are still under pressure following the recession and "may be tempted into false economies by failing to review their policies".
To guard against costly surprises, FNB Insurance Brokers advises that you review your policies and pay particular attention to any restrictions and exclusions. Barret says the "grey areas" include:
Personal belongings. Barret says under-insurance is a major problem. You should regularly review your policies and the value of your insured items to take account of inflation.
For example, if you bought a TV set five years ago for R3 000, a similar replacement today would cost far more than R3 000, and you need to update your cover accordingly. If you fail to do this, you risk a partial settlement of your claim. For example, if you took out cover for R250 000 on your personal possessions and the insurer finds that your possessions were actually worth R500 000, the insurer is likely to apply the rule of average and will pay you only 50 percent of your claim.
You should do an annual inventory of your insured items - your insurer can refer you to a valuer for this purpose and, in some cases, your insurer will pay the valuer's costs.
All-risks cover. This cover applies to personal portable items. You may assume that cover for such items is included automatically in your household contents insurance. However, you should specify expensive items, such as laptop computers and cellphones, under your all-risks cover, because the maximum all-risk amount may not be sufficient to cover the replacement cost of the individual items. You should also specify your jewellery and expensive branded goods, such as designer handbags.
Home damage. Full homeowner's insurance is far from automatic. You have a duty to ensure that you maintain your property. For example, if you fail to maintain your roof and allow your gutters and down-pipes to clog up, a claim for rainwater damage may be repudiated.
Car value. You should check the value for which your vehicle is insured. If it is insured for market value, the insured amount should decrease each year as your car's market value decreases and your premiums may increase less dramatically. Your insurer will increase your premiums to a certain extent to cover the contingency of a motor vehicle accident where your car needs to be repaired.
If your car is insured for its replacement value, the insured value is unlikely to decrease each year but will be adjusted by the insurer for inflation.
Car hire. In terms of your policy, free car hire may be available following an accident, theft or hijacking, but there may be exclusions or restrictions. For example, you may have free car hire only if you use a particular car hire company or you may be restricted to only five days of free hire. So, you may not have the blanket cover you assumed.
NOT TAKING COVER CAN LEAD TO RUIN FOR SENIOR CITIZENS
Senior citizens on fixed incomes who have been hard hit by the low interest rates of the past two years are reducing and, in some cases, cancelling their short-term insurance to save costs.
But the consequences of dispensing with insurance can be disastrous for pensioners, Debbie Barret, the general marketing manager for First National Bank Insurance Brokers, says.
She says senior citizens may face huge claims to cover their third-party or personal liability exposure, which could ruin them financially. Third-party insurance refers to cover for any claims made by a person other than the person whose property you damage. For example, if you are involved in a car accident where you are at fault, you may be liable for the damage to the other driver's car, as well as for any injuries sustained by the occupants of the other car.
Third-party insurance is not restricted to car insurance. Personal liability insurance covers you for instances when you may be held personally liable to pay compensation because your negligence or that of a member of your household resulted in accidental damage to someone else's property or in personal injury or death.
Barret says it is important to be aware of the following if you are considering self-insurance:
Self-insurance is most appropriate for high-net-worth individuals who have cash reserves and the discipline not to spend their emergency funds. "Self-insurance for the average consumer is apt to degenerate over time and become non-existent, leaving you exposed to dire financial risk," she says.
If you believe that you can make self-insurance work, you should make sure that you have sufficient funds to cover any third-party and personal liability claims against you, because such claims can run into millions of rands.
Older people sometimes qualify for reduced premiums, because they constitute a lower risk as a result of their experience and more prudent lifestyles.
You and your broker should regularly review your insurance needs to ensure that you have the appropriate level of cover in place. This applies not only when you have accumulated more possessions but also if you have downsized.
Barret says while disciplined and prudent older people are less exposed to certain risks than are young people, in some respects they are more vulnerable. For example, she says, a younger person who earns a salary may be able to replace his or her losses, whereas a pensioner who relies on a fixed monthly income often lacks the financial resources to make good a major loss.
Debbie Barret, the general manager of marketing at First National Bank (FNB) Insurance Brokers, says many consumers are still under pressure following the recession and "may be tempted into false economies by failing to review their policies".
To guard against costly surprises, FNB Insurance Brokers advises that you review your policies and pay particular attention to any restrictions and exclusions. Barret says the "grey areas" include:
Personal belongings. Barret says under-insurance is a major problem. You should regularly review your policies and the value of your insured items to take account of inflation.
For example, if you bought a TV set five years ago for R3 000, a similar replacement today would cost far more than R3 000, and you need to update your cover accordingly. If you fail to do this, you risk a partial settlement of your claim. For example, if you took out cover for R250 000 on your personal possessions and the insurer finds that your possessions were actually worth R500 000, the insurer is likely to apply the rule of average and will pay you only 50 percent of your claim.
You should do an annual inventory of your insured items - your insurer can refer you to a valuer for this purpose and, in some cases, your insurer will pay the valuer's costs.
All-risks cover. This cover applies to personal portable items. You may assume that cover for such items is included automatically in your household contents insurance. However, you should specify expensive items, such as laptop computers and cellphones, under your all-risks cover, because the maximum all-risk amount may not be sufficient to cover the replacement cost of the individual items. You should also specify your jewellery and expensive branded goods, such as designer handbags.
Home damage. Full homeowner's insurance is far from automatic. You have a duty to ensure that you maintain your property. For example, if you fail to maintain your roof and allow your gutters and down-pipes to clog up, a claim for rainwater damage may be repudiated.
Car value. You should check the value for which your vehicle is insured. If it is insured for market value, the insured amount should decrease each year as your car's market value decreases and your premiums may increase less dramatically. Your insurer will increase your premiums to a certain extent to cover the contingency of a motor vehicle accident where your car needs to be repaired.
If your car is insured for its replacement value, the insured value is unlikely to decrease each year but will be adjusted by the insurer for inflation.
Car hire. In terms of your policy, free car hire may be available following an accident, theft or hijacking, but there may be exclusions or restrictions. For example, you may have free car hire only if you use a particular car hire company or you may be restricted to only five days of free hire. So, you may not have the blanket cover you assumed.
NOT TAKING COVER CAN LEAD TO RUIN FOR SENIOR CITIZENS
Senior citizens on fixed incomes who have been hard hit by the low interest rates of the past two years are reducing and, in some cases, cancelling their short-term insurance to save costs.
But the consequences of dispensing with insurance can be disastrous for pensioners, Debbie Barret, the general marketing manager for First National Bank Insurance Brokers, says.
She says senior citizens may face huge claims to cover their third-party or personal liability exposure, which could ruin them financially. Third-party insurance refers to cover for any claims made by a person other than the person whose property you damage. For example, if you are involved in a car accident where you are at fault, you may be liable for the damage to the other driver's car, as well as for any injuries sustained by the occupants of the other car.
Third-party insurance is not restricted to car insurance. Personal liability insurance covers you for instances when you may be held personally liable to pay compensation because your negligence or that of a member of your household resulted in accidental damage to someone else's property or in personal injury or death.
Barret says it is important to be aware of the following if you are considering self-insurance:
Self-insurance is most appropriate for high-net-worth individuals who have cash reserves and the discipline not to spend their emergency funds. "Self-insurance for the average consumer is apt to degenerate over time and become non-existent, leaving you exposed to dire financial risk," she says.
If you believe that you can make self-insurance work, you should make sure that you have sufficient funds to cover any third-party and personal liability claims against you, because such claims can run into millions of rands.
Older people sometimes qualify for reduced premiums, because they constitute a lower risk as a result of their experience and more prudent lifestyles.
You and your broker should regularly review your insurance needs to ensure that you have the appropriate level of cover in place. This applies not only when you have accumulated more possessions but also if you have downsized.
Barret says while disciplined and prudent older people are less exposed to certain risks than are young people, in some respects they are more vulnerable. For example, she says, a younger person who earns a salary may be able to replace his or her losses, whereas a pensioner who relies on a fixed monthly income often lacks the financial resources to make good a major loss.
Please contact Bestsure on 0861 10 12 20 to make sure you are correctly insured.
Resource : Personal Finance
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